EUR/USD loses the grip and threatens 1.10 ahead of EMU data

• EUR/USD is losing upside traction and recedes to 1.1010.
• A mild recovery in the Greenback is collaborating with the drop.
• EMU’s Industrial Production next of relevance in the docket.

The upside momentum in the shared currency is losing some traction at the beginning of the week, prompting EUR/USD to recede to the vicinity of 1.1010.

EUR/USD looks to data, USD

After three consecutive daily advances, the pair is now facing some difficulties to keep the rally well and sound on Monday on the back of fresh demand for the Greenback.

Spot has been gaining extra ground in past sessions in response to the better mood in the risk-associated complex following auspicious headlines from the US-China trade front and the Brexit process.

In addition, weakness in key US fundamentals (mainly the manufacturing sector) has been also lending support to the idea of extra easing by the Federal Reserve in the next meetings.

Looking ahead, Monday’s docket in the euro region highlights the publication of August’s Industrial Production and French auction of 3-/6-/12-month BTFs.

What to look for around EUR

The pair met strong resistance in the mid-1.10s, where sits the key 55-day SMA, sparking some profit taking and the ongoing retracement to the vicinity of the 1.10 support. The corrective upside, however, remains well in place for the time being and supported by the improved mood in the riskier assets and a weak Dollar. Looking at the broader picture, the relentless slowdown in the region does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the longer run. On another front, potential US tariffs on imports of EU cars remain well on the table, while the Brexit limbo and UK politics could also maintain gains somewhat limited.

EUR/USD levels to watch

At the moment, the pair is retreating 0.16% at 1.1017 and a breakdown of 1.0983 (21-day SMA) would target 1.0879 (2019 low Oct.1) en route to 1.0839 (monthly low May 11 2017). On the flip side, the next barrier emerges at 1.1051 (55-day SMA) seconded by 1.1062 (monthly high Oct.11) and finally 1.1109 (monthly high Sep.13).